How To Make a Compelling Case To Investors
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It is believed that a true entrepreneur is always pitching—to investors for funding, to employees to motivate them to join, to partners to make them part of a remarkable journey, and to potential customers to convince them to buy products or services. While some of the components of ‘pitching’ are common across all situations, this piece focuses on pitching to early-stage investors. For such pitching events to be successful, one must be mindful of these five important components.
Most investor pitching sessions are short. Hence, it is important for entrepreneurs to succinctly deliver the desired impact on their audience. The starting point is to know your audience well—what have been their recent investments? Which domains or industries are they interested in? What stage (for example, seed or series A) of funding do they prefer to invest in? Who is the intended audience—senior partner or an investment analyst? The entrepreneur should tailor their approach based on the answers to these questions. The best possible ‘impact’ of such pitching events is an investor who is impressed and interested enough to want to engage in discussions with the founders later. Investors rarely write cheques on-the-spot (despite the many media stories that are floating); they often meet the founders later for a deep-dive session and a thorough due diligence exercise before issuing a term sheet. So, it is critical that in the short window of time, you make the investor feel excited about the opportunity that you are offering.
A Robust Business (Model)
This is the heart of any pitch session. The entrepreneur should have spent enough time analyzing the business opportunity so that she can confidently share her insights with investors. This entails walking investors through the problem/opportunity, uniqueness of your solution, sharply defined target customers and how you will serve and acquire them. Don’t forget to mention your revenue models and what you will be doing to make the competition irrelevant. Investors must ‘feel’ the founders’ unbeatable combination of energy, experience, and skills needed to execute effectively. Be mindful of covering two dimensions that most entrepreneurs fail to highlight in their pitches: How big is the opportunity? How will the investors make money?
Contrary to popular belief, Powerpoint slides are not essential for pitching; it helps though to use some audio-visual tools (for example flip charts, video, live product demo) to augment their spoken presentation. Since a slide deck is a common tool, while making your decks please keep in mind that the intent is not to drown the audience in bullet-points of endless information. Instead, it is to focus their attention on key points. Guy Kawasaki’s 30/20/10 guideline is quite useful: use of font size 30 or more, and 20 minutes to present a maximum of 10 slides. In general, a minimalistic format that draws heavily on images works quite well. Remember most people recall more of what they see than what they hear. So, a good visual presentation makes a deeper impression.
Part of a good visual impression is how you present your ideas and plans to investors. Your attire, posture, and confidence are as important as enunciation and maintaining eye contact. An entrepreneur who engages with her audience, speaks clearly, listens well to their questions/comments, and provides crisp and honest answers will always be remembered (with or without a deal).
Making a Connection
This last component is perhaps the most important from an engagement perspective. While funding decisions are supposed to be analytical, investors also rely on their intuition. In fact, research shows that all of us make decisions by combining inputs from the right and left sides of our brains. To evoke the audience’s emotions, you must share how the idea connects with you at an emotional level—whether it’s the Eureka moment that got you started or a personal sacrifice that you had to make to embark on the journey. Tell your real-life story of your insights, pain, and learnings to capture listeners’ attention. It goes without saying that this level of sharing must come from deep within the heart with authenticity.
To conclude, an entrepreneur is always pitching while painting her vision of the future through from-the-heart stories. Keep your story short, sweet and compelling for investors to come back for more. As Ryan Robinson wrote, “Make your pitch personal and craft a story that gets your audience on your team.”